Deutsche Bank boosts capital buffers in fourth quarter

Deutsche Bank saw fourth quarter revenues undershoot forecasts, with clients put off by concerns about its finances.

For the three months to December, Deutsche Bank reported a net loss of €1.89bn, marking a slight improvement on the €2.12bn of red ink posted a year ago.

However, the investment bank said bond trading revenues, increased by 11% to €1.38bn, missing analysts´ forecasts for a rise to €1.68bn.

In parallel, equity trading revenues dropped 23% to €428.0m, versus no change which the consensus had penciled in.

Chief Executive Officer John Cryan is shrinking the trading operations, built by his predecessor, to raise capital levels eroded by misconduct costs. While the bank has settled some of its biggest legal cases in the past two months, an initial request that the bank pay $14 billion to settle a U.S. Justice Department investigation of mortgage-backed bonds spooked some investors in the quarter.

"Our results for the year 2016 were heavily impacted by decisive management action taken to improve and modernize the bank, as well as by market turbulence for Deutsche Bank," the chief of Germany´s largest lender, John Cryan, said in the statement.

"We proved our resilience in a particularly tough year. We finished 2016 with pleasingly strong capital and liquidity ratios and we are optimistic after a promising start to this year."

Deutsche Bank’s common equity Tier 1 ratio improved to 11.9% during the period from 11.1% in the previous quarter (consensus: 11.3%).

In January settled with the Department of Justice over its role in the meltdown seen in the market for mortgage-backed securities during the 2008 financial crisis.

It agreed to pay $3.1bn in civil penalties and to offer $4.1bn in relief to homeowners.

Nonetheless, Deutsche Bank was still facing litigation in the US linked to allegations it helped wealthy Russians to shift billions of dollars of funds out of the country and into the manipulation of foreign currency rates and metals prices.